Note : This was written in February 2015 as a thesis paper for school. A blog-friendly version (read: more pictures, fewer words) may come soon.
Net neutrality, simply put, is the principle that a network operator, specifically an Internet provider, should treat all data on their network equally, and not block certain applications, devices or consumers access to the network. The most powerful network of our era, the Internet, which affects every facet of modern life, depends on net neutrality for its well-being. Therefore, net neutrality is necessary as a policy and should be implemented by the government.
The history of net neutrality as a policy dates back to networks older than the Internet, like radio, telephone and television networks. The Communications Act of 1934 is one of the earliest pieces of legislation that creates a separation between content distributors and network owners. The act establishes telecommunications networks as “common carriers” which means they operate like a public utility, and make their services available to the general population. Title II of the act states, “It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device.” The act also established the Federal Communications Commission (FCC) to regulate the industry according to these laws.
The effect of this regulation can be illustrated by a few court cases and regulatory decisions from this time. The first major landmark case was the 1956 Hush-A-Phone Corp. v. United States, in which the D.C. Circuit Court of Appeals ruled that AT&T could not prohibit users from attaching their own equipment, including sound-quality enhancing devices, like the Hush-A-Phone device, to AT&T’s network (Wu, “Network Neutrality, Broadband Discrimination” 142). In a related decision, the FCC ruled that Carterphone, a device that allowed two-way radios to be connected to someone on a landline telephone, could not be banned by telephone networks, and also overruled the tariff that had previously given telecoms the exclusive right to manage equipment on their networks (“In The Matter Of Use Of The Carterfone Device”). The stance that followed was that as long as the equipment was not harmful to the network, or otherwise illegal, the network operators may not interfere with its usage.
While this established platform neutrality for telephone and television, broadband Internet was made subject to different regulation. This happened, first of all, because the Internet did not exist in 1934 when the act was passed, and when an amendment was passed as the Telecommunications Act of 1996 to address broadband, it was classified as an “informations service”, and was therefore not regulated as a common carrier (“Why It’s a Good Thing That Broadband Isn’t a Common Carrier.”). Because of this lapse in regulation, broadband Internet service providers (ISPs) often blocked both applications and devices from their networks. In the early phases of home broadband, this involved banning the use of Wi-Fi, so only certain devices could be wired into the network. Some recent examples of discriminatory behavior have occurred when mobile Internet providers like Verizon, AT&T, and Sprint blocked digital payment application Google Wallet from phones used on their network, so they could release their own similar application, Softcard, without competition (“In the Matter of Protecting” 40; Ammori ).
In 2003, Tim Wu, who was then working as Associate Professor of Law at the University of Virginia, coined the term “network neutrality” to describe the idea that all data on a network should be treated equally, in order to preserve a competitive market. Without it, he claimed, the best applications would never emerge and business on the Internet would never expand because if the network operators could block what they did not like, economic evolution would never occur, and the outcome would be decided before the consumer had any say (Wu, “Network Neutrality, Broadband Discrimination” 145). Broadband operators objected to this, citing the words of the 1996 Act: “It is the policy of the United States . . . to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation” (“Why It’s a Good Thing”).
In 2004, Michael Powell, chairman of the FCC at that time, presented four “Internet Freedoms” : Freedom to access content, to use applications, to attach personal devices, and to obtain service plan information. These guided the Commission’s decisions for the next few years, but their legal authority to make such rulings was challenged in court (Wu, “The Broadband Debate” 90). In 2010, after having a order dismissed by the D.C Court of Appeals, the Commission opted to pass net neutrality rules as official regulation, inspired by the principles established by Chairman Powell. These rules were called the “Open Internet Order” and were meant to derive their authority from Section 706 of the Telecommunications Act (Wheeler), but were met with immediate backlash from the industry. In 2014, a lawsuit against the Open Internet Order from Verizon was brought to the D.C. Court of Appeals, and the court ruled that because broadband was still classified by the Telecommunications Act under Title I as an “informations service”, the FCC had no legal authority to enforce their order, and the rules were thrown out. The FCC responded, following pressure from activists from many Internet based businesses and content distributors, as well as President Barack Obama, by seeking to gain legal authority to implement net neutrality by reclassifying broadband Internet under Title II of the Telecommunications Act, as a common carrier (Snider). Chairman Tom Wheeler, formerly a lobbyist for the cable industry, changed his stance on the net neutrality after receiving a record-breaking 4 million public comments on the issue, saying that the rules were backed by “long-standing regulatory principles, marketplace experience, and public input” (Wheeler). He then submitted rules for reclassification to the Commission for a vote, and in early 2015, the FCC voted to implement the regulation (“FCC Adopts Strong, Sustainable Rules to Protect the Open Internet” 1).
Throughout this history of theoretical argumentation and scrutiny from both the industry and government, net neutrality has produced varying opinions. The opinions lay on a spectrum, where one end is occupied by full objection to net neutrality, the proponents of which are the network operators themselves, who claim that because they own the infrastructure, they should be allowed to control it. Next would come those who argue that while they may ideally support separation of content and network, there should not be regulatory interference with operators, because it would disrupt the free market. They claim that the market would naturally come to a desirable outcome by responding to what consumers want. This group would include right-winged economists like Christopher Yoo, and are dubbed as “Deregulationists” by Tim Wu: those who are still “basically interested in innovation and open market entry” but primarily concerned with using non-governmental means (“The Broadband Debate” 69). The next group supports government involvement to ensure net neutrality, but would prefer that the rules were put in place as part of a bill of Congress, rather than have the FCC do it. They support the same rules proposed by the FCC, but want to shed the baggage of the Communications Act as well as avoid unnecessary stipulations that they say would hinder the industry. Such opinions belong to politicians such as FCC commissioner Ajit Pai and Republican congress members, and their main separation from others is the objection to the idea that Internet should be regulated as a utility (Pai 3). The final group, which includes the Democratic party members of the FCC, supports regulation of the Internet as a utility, pointing to various precedents in other systems. This type of regulation is the current form of net neutrality in place, but is likely to be opposed in court by the industry. With so many versions of an idea in play, it is crucial to understand what to support and why.
Through years of public debate and legislation, net neutrality has become a pressing issue. Despite criticism, the policy is a necessary part of the distribution of content over broadband networks, and government bodies should be responsible for enforcing it when the industry does not. There are a host of reasons for this need, all of which can be agreed upon by each of the different camps of ideology outlined previously. First, there are steep judicial and legislative precedents for governing infrastructures, which are quite analogous to the proposed net neutrality solutions for the Internet. There are also economic incentives to net neutrality regulation. Many economic principles of the capitalist system often appear excluded by net neutrality regulation to those who are unfamiliar with the policy, but under further investigation, it is very clear that net neutrality still respects the fundamental rules that many people, especially conservative Americans, have come to expect.
Many think that the repercussions of net neutrality regulation are not understood by proponents because the Internet is a young technology. In fact, net neutrality is supported by various court decisions through the years, including the Hush-a-Phone and Carterphone decisions discussed earlier, the positive repercussions of which are well known. Before Hush-a-Phone, all network attachments had to be approved by the network operator. Using a telephone that had not been approved by the AT&T Bell system would be grounds for termination of service. The Hush-a-Phone decision made it possible for consumers, rather than only operators, to chose what attachments they used on the network, as long as it was not harmful to the infrastructure or the other users. There was still some resistance, but with the Carterphone decision and pressure from the FCC, the market was open to consumer control. Without this, many innovations that depend on the original network would have never been developed. Tim Wu points out that the opening of the network to any non-harmful device led to answering machines, fax machines, modems, and now home networks, all built off the telephone network (“Hearing on Network Neutrality” 46). The operator of this infrastructure could have never foreseen the astounding future potential, and would have banned use of these innovations, if allowed, because they did not fit the intended purpose of the infrastructure. Even if they had provided their own innovations for the network, progress would have been much slower, and the quality much lower. In order for the full potential to be reached, the market had to be open to the fast-paced cutthroat consumer world that the AT&T monopoly protected it from for so long. The courts ruled to open up the networks, and both the consumer and the industry benefited.
When Internet providers violate net neutrality, they are violating the principles established by judicial precedent in these cases, principles that cause economic prosperity . For years, internet providers viewed home networking, something now taken for granted through technologies like Wi-Fi, as a violation of their Terms of Service agreements. AT&T went so far as to call home networking “theft of services” and warned subscribers of consequences. In 2002, when the practice became mainstream, 4 of the 10 largest cable companies in the United States “contractually limited the deployment of home networks” (Wu, “Network Neutrality, Broadband Discrimination” 159). However, this violates the principle of allowing non-harmful network attachments, because, although the use of routers was outside of what cable operators envisioned their network being used for, it did not harm the network.
Today most Internet providers have largely given up the fight against third-party devices, although there is sometimes debate over whether a device is harmful to the network or not. What Internet providers are frequently responsible for today is blocking content that they do not approve. If they perceive that an application or content stream may compete with its own offerings, or could be easily monetized as an add-on service, Internet providers are apt to take action against it. There are many examples of this behavior. Madison River Communications, a US-based regional ISP, blocked its customer from using Vonage in 2005. Vonage is a Voice Over Internet Protocol (VoIP) application, meaning it can be used to send telephone calls over internet, sacrificing some quality for low-cost phone calls, including long-distance or international calls. Companies like Madison River usually have separate phone service packages that they sell (many of which now run on the same VoIP technology Vonage used for years), and Vonage was threatening that revenue stream. That same year, a Canadian company blocked a union’s website because of its strike against the company. From its original release up until 2009, Apple was restricted from offering Skype (which includes a form of VoIP) on the iPhone as part of their contract with AT&T, in order to ensure customers paid for “talk and text” minutes, rather than using their internet connection to make calls for no additional cost (Ammori).
Network operators block content quite readily, but hesitate to block devices because of the requirement to allow non-harmful attachments access, and this is inconsistent. The principle of what was decided in the Hush-a-Phone and Carterphone cases was that as long as an attachment did not have an adverse effect on the network, it must be allowed access, and this should include non-harmful content. After all, what is the difference between a third-party telephone headset and a third party phone app, other than that one is virtual? Both do not cause harm to the infrastructure of the network or impede other user’s access, and although both may take away a monopoly on a revenue stream for the operator, they create competition for the industry and choice for the consumer. Obviously, the court did not know about the possibility of the rule being used in the context of the internet, so legally enforcing network neutrality for content in the same way as network neutrality for devices is difficult, but regulators should understand the equality in principle. Anyone who agrees that Hush-a-Phone created positive repercussions by allowing consumers free access to devices should, in theory, agree that good net neutrality legislation will create positive repercussions by allowing consumers free access to content.
In addition to telephone network, there is another great equivalent to net neutrality in practice, one that millions of people take for granted every day: the electric power grid. The Internet is surprisingly similar to the power grid, beyond just the fact that both are types of networks. In The Broadband Debate, Tim Wu points out that the same reason people use the Internet is the same reason that they use the power grid, not because they care about electricity or how special it is, but because they care about the things that having electricity empowers them to do, like turn on light bulbs or run an air conditioner. In the same way, it is not the bandwidth itself that creates value, it is the content made available by that bandwidth. Similarly, consumers in both systems are accustomed to using their access as they please. Tim Wu has also pointed out on many occasions how odd it would be to violate these expectations in for electric customers. There is “no built-in favoritism for the VCR over the DVD player. You do not ask the electric companies permission before plugging in a new cordless phone.” Violating net neutrality by favoring certain applications over others, he says, is “as if the electric company one day announced that refrigerators made by General Electric would henceforth not work quite as well as those made by Samsung (Hearing on Network Neutrality; “Keeping the Internet Neutral?”).” If electric companies could monitor what kind of appliances were being used, they would be in the exact position of an ISP. If discrimination such as the above took place, consumers would obviously become outraged. But why, exactly? If the electric company owns the wires ( or in terms of the net neutrality debate, they “control the pipes”), shouldn’t they get to control how it gets used? There are two reasons that they could not do that. The first is lack of competition. It is not as if a consumer who wished to continue to use their GE fridge at the same level of performance could just switch to a power company that instead discriminated against Samsung or to one without discrimination at all, most households don’t have that choice. Indeed, the market of Internet Service Providers is quite similar. Eighty-one percent of Americans have only one choice in traditional broadband internet, and ninety-four percent have two of fewer choices. About a quarter of Americans have access to a different form of connection like fiber or satellite, but are limited to one provider in most circumstances. Many times if a different technology is available, it is not available as an alternative option to a traditional connection, but as the only option (Hearing on Net Neutrality; Internet Access Services). Normally, if a company makes a decision that a customer does not like, the customer can simply chose a competitor, forcing the first company to improve itself , but when there is no choice, there is no negative feedback for a company when they make decisions that harm the consumer.
The other reason it would be outrageous for an electric company to discriminate against appliances is ownership. Imagine if there was company with a power plant, and they had an agreement with the local utility company to deliver the current to homes. The company that controls the grid to home hookup might not own the power plant, and the company that owns the power plant might not be the same one that has to distribute it to consumers. The Internet works in the same way. No one entity owns all the cable or fiber that makes up the Internet. To get content from one side of the globe to another, bits of information pass through infrastructure owned by many different entities through a complex system of peering and transit. In the US, the majority of the backbone is owned by AT&T, but the delivery to each home is controlled by what are called “last mile” providers (Van Der Berg 1). These companies own little of the Internet infrastructure at large, but are responsible for distributing content to all the access points in a geographical area. The ISPs who are usually guilty of violating net neutrality are last mile providers, so when they discriminate, they are making decisions about content that they do not own, and taking undue advantage of their position as a gatekeeper. Usually the way discrimination with last mile providers works is instead of charging for bandwidth, the provider demands a company pay extra to ensure its data reaches the customer intact, or else suffer a performance hit. The incentive for the gatekeeper is now to reserve the best access for the highest bidders, and to maximize the payout, they create artificial scarcity in bandwidth, as monopolist might do (Wu, “Keeping the Internet Neutral” 582). Why should a company that only accounts for the last step in a long process make decisions for what is otherwise an open network? This is why it is not the right of Internet Service Providers to withhold content from consumers or otherwise provide preference for one type of content over another.
The most compelling reason for net neutrality is the catalyst it creates for technological innovation. There are many concrete examples, but perhaps the most outstanding is the story of Vonage. For years cable providers talked about the possibility of VoIP technology, but were reluctant to put resources into it because it would bite into their revenue stream from selling phone connections, and if a high number of subscribers used it, they would have to upgrade their aging networks. Vonage came on the scene by selling phones that plugged into the Internet jack, and routed calls over the general network (Wu, “The Broadband Debate” 72). The quality was as good as average cell service, and consumers saved money by only paying for one Internet connection, rather than an additional phone connection. If ISPs had been allowed to discriminate, as Madison River tried, VoIP would have never taken off, and consumers would still be using traditional phone connections. But after Vonage, not only did consumers save, the adoption of the technology incentivised the ISPs to upgrade their network, so most customers who buy phone connection through a cable provider now use the same VoIP technology the cable providers once spurned.
In the net neutrality debate, the phenomenon seen in this example is demonstrative of the end-to end principle which, at its basic form, is evolutionary economics. If the network operator is allowed to discriminate, it may favor certain applications over others, perhaps its own version of an online video application over others on the market. This product would obviously emerge as the top application, because it has the backing of the network. But this does not mean it is the best. Economics tends to work in an evolutionary sense, where the best products and services survive and the inferior ones are ignored by consumers. But as was shown before, that power comes from competition between businesses for consumers. The end-to-end principle states that the intelligence of the network comes from the ends (the consumer) rather than the center (the network operator) because the center, being only one entity, is inherently short-sighted. The end-to end principle puts as many players in the game as possible to ensure the result is, as Tim Wu says, “truly the fittest and not merely the favored” (Wu, “The Broadband Debate” 87). This might not seem extremely important, but consider what it means in a field other that the Internet. In the 1860’s, the primary network was telegraph, which was monopolized by Western Union. In a net neutrality violation that predated the term, Western Union signed an exclusive deal with the Associated Press (AP), and raised other news wires’ rates to costs so high they could not compete. The AP, in turn, had exclusive reporting deals with newspapers, so for many Americans, news came from only one source. This monopoly was abused to the point of deliberate censorship, so there are documented cases of the AP attempting to manipulate politics by omitting wires concerning politicians they did not like (Hearing on Network Neutrality).
In addition to being a catalyst for creating better technology that everyone can benefit from, net neutrality can protect valuable resources that could fall by the wayside otherwise. Without net neutrality, Internet providers could charge for content providers to have access to subscribers. Naturally, content that produces the most revenue would be able to acquire the best access, and providers would have an incentive to drop any content that was not cost-effective. Many people, such as Barbara Stripling, former president of the American Library Association, think that these priorities would lead to providers to deprioritize educational websites that might not be capable of generating revenue for the provider. As a result, rural or low-income areas that depend on the Internet for many vital education needs,would be unable to get access because of their inability to provide benefit for the provider (Cook 47).
These reasons should clearly point to net neutrality as a necessary tool to ensure the health of a valuable global resource. It is also necessary for the government to take responsibility for enforcing these regulations. Many people take issue with this, but the government is uniquely qualified to take such action. As was illustrated with the Vonage tale, the industry is often short-sighted when it comes to making informed decisions, and content providers are unable to protect themselves. The industry can safely ignore consumer advocacy groups, because they only make decisions in their economic favor, and their revenue streams are not in jeopardy. The other way for consumers to have a say is through the government. Many people are opposed to legislation, but the point of democratic government is to give people a say. The 2010 Verizon v FCC case showed that simply stating a code of honor is not enough, so net neutrality must be enforced by either Congressional action, which as so far been stalled, or a more legally sound stance from the FCC, which is coming in the form of Title II regulation. This is why net neutrality is a necessary policy that should be enforced by responsible government bodies.
There are some major concerns about net neutrality and its implementation, and that has led to various types of objection to the policy. Following the same logic used in favor of net neutrality, it is possible to discredit these arguments that many people, especially those who have a misunderstanding of the principle of net neutrality, frequently use. Some critics claim that net neutrality is not needed because violations of it are not a threat to the Internet economy, or because there are no violations to speak of. Others believe net neutrality to be a violation of free market principles, and that it is an excuse for the government to expand its reach into civilian Internet use. All of these reasons are commonly cited by the media and by legislators who attempt to fight net neutrality regulation.
In his dissent given against the proposed 2015 FCC reclassification, Republican commissioner Ajit Pai said, “So the FCC is abandoning a 20-year-old, bipartisan framework for keeping the Internet free and open in favor of Great Depression-era legislation designed to regulate Ma Bell. But at least we’re getting something in return, right? Wrong. The Internet is not broken. There is no problem for the government to solve.” He points out the same events that most proponents use in favor as net neutrality, events such as Madison River blocking Vonage, Comcast blocking BitTorrent or AT&T restricting Apple’s Facetime, and says that they “aren’t enough to tell a coherent story about net neutrality” (Pai 8). This is a prime example of the argument that net neutrality violations are not a problem. Pai lists dozens of popular devices and applications that depend on Internet connection, using them as evidence that the Internet has gone along fine without net neutrality regulation. But many of the devices Pai lists would not be possible without pressure from the FCC and consumers for ISPs to follow net neutrality. Home networking, as mentioned earlier, was only allowed by 4 out of the 10 network operators in 2002 although it was technologically feasible at that point. Not one had allowances for a consumer to operate a server out of their home, something that thousands of consumers do now, often to play online games or run online businesses from their homes (“Net Neutrality, Broadband Discrimination” 160). If broadband providers had not been pressured into allowing Wi-Fi use, very few of the devices Pai listed would be practical. So even if we look beyond highly publicized touchstone events, there is widespread evidence that net neutrality is threatened on a general level.
Even if there was not evidence for net neutrality violation, there is precedent for putting legislation in place as a future safeguard. A company would not discriminate without necessity, opponents say, because making customers unhappy would harm its business. But discrimination might not always be so rational. Tim Wu points out that a well-known piece of legislation exists for the purpose of making business rethink about how discrimination really helps their business: “In the employment context, the various discrimination laws have an explicitly educational function. For example, an express purpose of age discrimination legislation is to force employers to reconsider stereotyped perceptions of the competency of the elderly in the workforce” (“Net Neutrality, Broadband Discrimination” 157). A company might have once operated under the misconception that hiring a man over a woman who has better qualifications would be in their favor, but employment laws help them rethink what is truly beneficial to them. The argument that businesses will eventually come to an optimal solution because they will make decisions in favor of the customer sometimes falls short in the same way. This relates back to the end-to-end principle: the sum of consumer knowledge will produce the optimal decision, rather than a single company, because in Wu’s word’s, “Firms instead generally depend on a set of routines that survive unless the firm dies or manages to mutate its way of doing business. This latter capacity is limited by the limits of humans’ ability to predict or foresee the future” (“The Broadband Debate” 83). Because lack of competition has blocked out negative feedback from customers, the only way to tell ISPs that their “set of routines” for making decisions about blocking content is not in their best interest is through educational regulation like the FCC’s net neutrality.
In response to the common claim that net neutrality harms the free market, the end-to-end principle that was previously explained and the evidence of anticompetitive practices in the last mile prove that the opposite is true. There is one other facet to this argument: If content providers wanted to get around oppressive operators, why could they not just build their own network? Christopher Yoo, one of the leaders in the academic field arguing against net neutrality says that, “Once a sufficient number of last-mile options exists, it would matter little if one network chose to make Yahoo! its preferred search engine” (“Keeping the Internet Neutral?” 584). In addition to the fact that the infrastructure owners attempt to prevent market entry, which is enough evidence on its own that the system is broken, the practicality of building a new network is limited to only very well established companies with massive amounts of cash. Zixue Tai, an associate professor of Journalism and Telecommunications at the University of Kentucky compares it to politics, another field with high barriers to entry. He says, “Metaphorically, it is like the argument anyone can start his own political party in the U.S. Look at the reality – any prospect of a third party during times of elections is going to be crushed by the two major parties to nil” (Tai).
To some, net neutrality appears to de-incentivize investment in network infrastructure, because there is no way no gain additional benefit from optimizing certain services with the network (called “vertical integration”). Thomas Hazlett and Joshua Wright claim that net neutrality should not be enacted because it would classify network innovations, like digital voice systems that cable companies offer instead of traditional phone lines, as discriminatory (Hazlett 771). The key here is that those types of networks are closed systems, where the operator owns the infrastructure and is not acting as a last mile gatekeeper. If a company wants to build its own innovative, private network for its services, it is not in violation, but if it allows third-party access, it must be indiscriminate. Lawrence Lessig of Stanford confirms that innovation in the infrastructure would not cease with net neutrality. “My concern is not whether the technology that “pipe” owners use is proprietary or not,” he says. Broadband operators can do as they please as long as “they do so in ways that do not interfere with other network functionality, conflict with net values, or create negative externalities for the Internet generally. The Internet was meant to be extended” (Lenard 5).
Perhaps the most popular counter to net neutrality is the apprehension that many conservative Americans have to accepting government regulation. Pai claims that the government has historically had a hands-off approach to the internet, and should continue to do so because they don’t own it. “And no,” he says, “ the federal government didn’t build that. Somebody else made that happen. For all intents and purposes, the Internet didn’t exist until the private sector took it over in the 1990s, and it’s been the commercial Internet that has led to the innovation, the creativity, the engineering genius that we see today” (Pai 5). Actually this is not true, because the Internet would not be in the state it currently exists in without the Internet. In his testimony to Congress, Tim Wu points out that the basic protocols that dictate how the Internet behaves were developed with funds from the Department of Defense, and that the “funding of research and development was an astonishing success, in part because the resulting design was so good it hasn’t much needed government. The internet is by design diverse and decentralized, making competition on top of the infrastructure viciously competitive. That competition has ironed out many of the problems government might otherwise be needed to solve.” The government has been a part of the Internet from the very beginning, and as the discussion of the FCC’s history shows, legislation like net neutrality is nothing new. In fact, Wu says that net neutrality is the natural status quo of the internet, but legislation is required to keep it that way: “ Some of you may feel hesitant, feel that government’s role will necessarily be complex. It need not be. All government needs to say is this: leave things the way they are. It needs merely to recognize consumers’ rights to access the content and applications of their choice, free from discrimination, and give meaningful remedies when those freedoms are interfered with” (Hearing on Network Neutrality 52). These limits of interference, in theory also extend to the government itself, meaning it may not discriminate against content, as in censorship. Tom Wheeler puts it this way: “This is no more a plan to regulate the Internet than the First Amendment is a plan to regulate free speech” (“Open Internet Rules”).
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